Is Tech City too expensive? Well…no.
‘Tech City is now too expensive for the start-ups it was intended to nurture’. Dramatic headlines about East London’s expensive real estate are always likely to grab the headlines.
The only thing people like more than success is failure.
But are they a fair reflection of the property market in Tech City, and what is really behind the headlines?
There is no doubt that the cost of securing work space in Shoreditch and its neighbouring districts has gone up. Over the past 24 months, Shoreditch Office Space has tracked the average price of office rentals in East London. While dependent on terms and length of lease, residents are now paying close to twice what they would have in 2011. A space costing £20 per square foot two years ago will now set back a client closer to £40.
But this has to be put in context. It is all well and good talking about £15 per sq. ft. in ‘Croydon’s Tech City’, but have you seen where Croydon is on a map? No, neither have we. You may save a bundle on your rental costs, but you will sacrifice the networking opportunities and geographical proximity to the UK Tech epicentre that can offer intangible benefits. A conversation with the right VC at Silicon Drinkabout may be the springboard your start-up needs to get off the ground.
It is not as simple as identifying a new location and declaring:
“Low, this shall be our new tech cluster, and it shall be good.”
Shoreditch is unique in a variety of ways. Proximity to key financial districts, cheaper rental costs than elsewhere in Zone 1, traditional ‘warehouse space’ lending itself to conversion – all these have been influential in shaping Tech City’s success.
And then you have the people. Some of the world’s most exciting and innovative minds have pitched up in East London and made it their own. The Tech City community is a beautiful, collaborative and organic development. This unique occurrence cannot be transplanted onto locations that do not already host Shoreditch’s eclectic and inclusive influences.
New clusters are bound to spring up, but they are unlikely to be driven by financial constraints. Realistically, there is money available to the companies that need and, crucially, warrant investment. Tech City is built around companies that have earned their place in the cluster, whether that be in shared space or a leased office. Increases in rental costs reflect the development of Silicon Roundabout and add legitimacy to the project.
Increased rental prices could also have a potential beneficial impact on the continued expansion Silicon Roundabout. Currently, companies require a degree of financial stability in order to take space in Shoreditch. Deposits, landlord checks and, of course, the overall cost of taking a lease make it inconceivable to most start-ups to commit to taking on a space.
This has had an important impact on the Tech City landscape. Firstly, East London has some truly fantastic co-working spaces. The Shoreditch Office Space team have been lucky enough to visit most of them, and experience first-hand the professional and collaborative environments they offer. Moreover, most founders are entrepreneurial themselves and understand the struggles that a start-up faces. Deposits are flexible, as are contracts and lengths of term. As a young start-up, there has never been a better time to engage with Tech City.
Leases are a fantastic way to secure an office if you are ready for them – but that is an important caveat. Shoreditch Office Space take the time to learn about each of our potential clients and ensure that a lease is the right option for them. We understand that taking on your first office is a daunting financial commitment for many companies, but Shoreditch Office Space are able to guide you through the entire process.
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